Browse by year:

State aid: Investigation opened into rental agreements concerning the Gufunes area in Reykjavík

Today, the EFTA Surveillance Authority opened an investigation into potential unlawful state aid granted by the City of Reykjavík through the rent of property and land in the Gufunes area in Reykjavík.

After a preliminary examination, the Authority is in doubt as to whether the rental agreements between the City and Íslenska Gámafélagið were concluded on market terms. The Authority started looking into the matter after receiving a complaint.

Until the year 2001, a fertiliser factory was operating in the Gufunes area. In 2002, the City of Reykjavík bought the factory and the surrounding area and took over all existing lease agreements. At the time there were several tenants. According to the City, the area was difficult to manage, the structures were in bad shape, some tenants were not paying rent and there had been an accumulation of scrap, such as car wreckages.

In light of this, the City decided not to renew the various lease agreements and instead conclude an agreement with one party only. In 2005, the City concluded an agreement on lease, clean-up and supervision of the area with Íslenska Gámafélagið, which was the largest single tenant at the time. The agreement has since been extended three times and is currently valid until 31 December 2018.

In order to check whether state aid is involved, the Authority needs to assess whether a private operator, under normal market conditions, would have accepted the same terms as the City for the renting out of the land and property in question. If not, the agreements could be regarded as unlawful state aid within the meaning of the EEA rules.

The decision to open a formal investigation procedure is without prejudice to the final decision of the Authority. The Authority will now call for further comments from the Icelandic authorities and third parties with an interest in the case.

A non-confidential version of the opening decision will shortly be published on the Authority's website and in the Official Journal of the European Union.